Draw a decision tree for this problem, and compute the expected monetary value for the act "drill". Should the company drill or sell the lease?

A company owns a lease granting it the right to explore for oil on certain property. It may sell the lease for $75,000, or it may drill the oil. The four possible drilling outcomes are listed below, together with probabilities of occurrence and dollar consequences:

Solution Preview

First step here is how many stages are there. In this case there is ...

Solution Summary

First step here is how many stages are there. In this case there is only one stage. In cases of multistage total outcome related to all stages is calculated and summed and decision having highest outcome value will be adopted